Designing Incentives to Elicit Creativity

© 2020 Ajanee Bhagya RanasingheIn this thesis, I investigate the effectiveness of incentives for creative tasks. While organizations value and pursue creativity, they must also promote the efficient use of limited resources. Prior research finds that incentives, despite being a key control mechanism, are ineffective for simultaneously encouraging both creativity and efficiency. However, this relatively recent literature has not yet examined how critical attributes relating to individuals, tasks, and incentives may influence incentive efficacy. I conduct two studies to examine the differential effects of combined creativity and quantity incentives for (1) individuals with different creative capacities, (2) distinct types of creative tasks, and (3) varying strengths of incentives. In the first study, I focus on individual creative capacity, which is a crucial, yet unexplored characteristic of individuals engaged in creative tasks. Using an experiment, I hypothesize and find that combined creativity and quantity incentives lead to sustained high creative performance for individuals with high creative capacity. Thus, contrary to prior beliefs that combined creativity and quantity incentives are ineffective, I show that they can be effective for the type of individuals typically employed for creative work. In the second study, I examine creative tasks with pre-specified problems, which is a prevalent task type that is under-studied in the prior literature. Contrary to expectations, my experiment results show that combined creativity and quantity incentives can be detrimental to creative tasks with pre-specified problems. Comparing my study with prior studies on pre-specified problems, I note that incentive efficacy appears to be sensitive to incentive strength. Therefore, I design a follow-up experiment to examine the effect of different incentive strengths on the performance in a pre-specified task. I find that, for pre-specified tasks, combined creativity and quantity incentives are detrimental to performance, regardless of incentive strength, although the effect is predictably lower with weak incentives. This shows that combined creativity and quantity incentives are not just ineffective, as found in the prior literature, but can impede creative performance in tasks with pre-specified problems. Furthermore, weaker incentives may alleviate some of the negative effects of incentives on performance. Overall, my thesis highlights the importance of having a more granular understanding of incentive design in the creativity sphere. It extends prior research by demonstrating that incentives can lead to higher or lower creative performance depending on characteristics of individuals, tasks, and incentives. This highlights the importance of future studies on the use of performance management and rewards to elicit creative performance